An Investor's Guide to Finance and the Economy

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Monthly Archives: February 2016

Don’t be too fixated on daily moves in the stock market (from Berkshire letter published in 2014)
Don’t get excited about your investment gains when the market is climbing (1996)
Don’t be distracted by macroeconomic forecasts (2004)
Don’t limit yourself to just one industry (2008)
Don’t get taken by formulas (2009)
Don’t be short on cash when you need it most (2010)
Don’t wager against the U.S. and its economic potential (2015)

Buffett On Management:

Don’t beat yourself up over wrong decisions; take responsibility for them (2001)
Don’t have mandatory retirement ages (1992)
“Don’t ask the barber whether you need a haircut” because the answer will be what’s best for the man with the scissors (1983)
Don’t dawdle (2006)
Don’t interfere with great managers (1994)
Don’t succumb to the attitudes that undermine businesses (2015)
Don’t be greedy about compensation, if you’re my successor (2015)

The market for negative-yielding bonds is now worth around $6 trillion, and has doubled in just over a month, showing just how worried how investors across the globe are about the state of the world’s economy.

Our bottom line result is that perfect foresight has great returns, but gut-wrenching drawdowns. In other words, an active manager who was clairvoyant, and knew ahead of time exactly which stocks were going to be long-term winners and long-term losers, would likely get fired many times over if they were managing other people’s money.

Question: if God is omnipotent, could he create a hedge fund that was so good that he could never get fired? No. It turns out even God would most likely get fired as an active investor.